The economic growth outlook for the US has been cut by the International Monetary Fund.
The government has made spending cuts, but consumers seem still to be going out and buying.
Washington’s across-the-board cuts, known as sequestration, only became effective in March because Congress could not agree on an alternative budget reduction plan.
However the IMF is now saying this deficit reduction has been “excessively rapid and ill-designed”.
According to this latest fund report, the US economy will grow by a sluggish 1.9 percent this year, and the forecast for next year is down from 3.0 to 2.7 percent.
Meanwhile the Federal Reserve’s bond buying programme may be cooled.
Markets are looking to next week’s Federal Reserve meeting and statements from chairman Ben Bernanke for clues as to the central bank policymakers’ thinking.
The IMF is urging the country to raise more revenue and slow the growth in spending on health care and pensions.